With several complaints from consumers who are forced to pay “service charges” irrespective of the kind of service provided to them by hotels and restaurants, the Government has decided that a customer can choose to have it waived if s/he is not satisfied with the services. The Centre has asked States to ensure that hotels and restaurants disseminate this information through displays on their premises.
It has been learnt that most owners of hotels and restaurants are following the practice of levying “service charges” in the range of 5-20 per cent as a form of “tips” to the waiters/waitresses from their customers. Now, it has been decided that the additional charge levied by the eateries and restaurants as a form of “tips” is all set to become optional.
“A number of complaints from consumers have been received that hotels and restaurants are charging “service charges” in the range of 5-20 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service rendered to him,” Union Consumer Affairs Ministry said in an official statement.
Earlier, the Ministry had sought clarification from the Hotel Association of India, which replied, “Service charge is completely discretionary and should a customer be dissatisfied with the dining experience, s/he can have it waived off.”
Therefore, it is deemed to be accepted voluntarily.
As most of the consumers are still unclear about how ‘service charge’ is different from service tax, they only end up paying it with food bill as charged by several eateries or restaurants in the country. The bill, however, is inclusive of food, drinks, service charge and other services as claimed by the owners, saying it better ambience and all.
In fact, service tax is a tax levied by the Government which claims it is 14 per cent and is payable on 40 per cent of your total bill from the customer. On the other hand, the service charge is an additional charge taken by a restaurant or hotel for offering its services to you. This additional charge usually varies from 5-20 per cent on the bills. It is usually equivalent to the tips that you want to pay the service providers and there is no need to pay a separate tip. Also, this amount has to be paid regardless of not being satisfied with the service or the food.
Highlighting provisions under the Consumer Protection Act, 1986, the Ministry also said this law provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice.
The Government also said that a consumer can make a complaint to the appropriate consumer forum against such unfair trade practices by hoteliers or restaurant owners. “The Department of Consumer Affairs has asked the State Governments to sensitise the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986. And also, to advise the hotels or restaurants to disseminate information through display at the appropriate place in the hotels or restaurants that the ‘service charges’ are discretionary or voluntary and a consumer dissatisfied with the services can have it waived off,” the statement said.